Correlation Between SPTSX Dividend and Sprott

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Can any of the company-specific risk be diversified away by investing in both SPTSX Dividend and Sprott at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining SPTSX Dividend and Sprott into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPTSX Dividend Aristocrats and Sprott Inc, you can compare the effects of market volatilities on SPTSX Dividend and Sprott and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in SPTSX Dividend with a short position of Sprott. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPTSX Dividend and Sprott.

Diversification Opportunities for SPTSX Dividend and Sprott

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between SPTSX and Sprott is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding SPTSX Dividend Aristocrats and Sprott Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Inc and SPTSX Dividend is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on SPTSX Dividend Aristocrats are associated (or correlated) with Sprott. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Inc has no effect on the direction of SPTSX Dividend i.e., SPTSX Dividend and Sprott go up and down completely randomly.
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Pair Corralation between SPTSX Dividend and Sprott

Assuming the 90 days trading horizon SPTSX Dividend is expected to generate 12.05 times less return on investment than Sprott. But when comparing it to its historical volatility, SPTSX Dividend Aristocrats is 5.25 times less risky than Sprott. It trades about 0.12 of its potential returns per unit of risk. Sprott Inc is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  9,059  in Sprott Inc on August 15, 2025 and sell it today you would earn a total of  3,857  from holding Sprott Inc or generate 42.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

SPTSX Dividend Aristocrats  vs.  Sprott Inc

 Performance 
       Timeline  

SPTSX Dividend and Sprott Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SPTSX Dividend and Sprott

The main advantage of trading using opposite SPTSX Dividend and Sprott positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPTSX Dividend position performs unexpectedly, Sprott can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sprott will offset losses from the drop in Sprott's long position.
The idea behind SPTSX Dividend Aristocrats and Sprott Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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